The delay experienced by the startup when it comes to going public is the result of regulators’ concerts around the platform’s offering of its BlockFi Interest Account (BIA).
According to the Texas State Securities Board, this offering would be a violation of local regulations and as such, BlockFi has notified by the agency in late April of 2021.
These concerns were shared by regulators in Alabama and New Jersey, which deemed that BIA is unregistered security and as such, a violation of state laws. In the case of New Jersey, BlockFi would have until July 29th to negotiate with the regulating agency before all BIA activity in the state needs to be halted.
BlockFi CEO Zac Prince has stated that the company is currently in the process of negotiating with regulators worldwide, while also expressing his belief that “the BIA is lawful”.
However, Texas already issued a cease-and-desist order against BlockFi, which could force the company to stop the offering of BIA until it registers with the local regulator.
Joe Rotunda, Texas State Securities Board’s director of enforcement, referred to the move by stating that “This legal action affords BlockFi and its affiliates the opportunity to respond to our allegations and present admissible evidence.”
Regulators in the United States seem to have started a crusade against crypto over the last year, forcing the crypto industry to tip-toe around at a time when no regulatory framework has been established for the industry.
Binance, Coinbase, Kraken, Ripple, Coin, schedule, and many more companies have been contacted by the Securities and Exchange Commission, Department of Justice, Internal Revenue Service, or local regulators to change their business model in one way or another.
The government has stated on several occasions that by cracking on crypto, they are preventing criminals from taking advantage of the technology to launder money, extort, and many other illicit activities, while also claiming to protect investors. However, the increasing uncertainty caused by the actions is just making things harder for everyone involved.
By making institutional investors think twice about joining the industry, consensus will be harder to achieve and the crypto space will take longer to mature, resulting in exactly the opposite result regulators claim to be looking for.
For now, Decentralized niches like DeFi will continue to grow in popularity, creating more antagonism between crypto investors and projects with the government… A resolution that will not benefit either side.